Predicting Financial Vulnerability in Malaysia : Evidence From the Signals Approach
This paper aims to investigate Malaysia’s vulnerability to a financial crisis. The methodology employed is an extension of the signals approach based on the original work of Kaminsky and Reinhart (1999). By studying the period from 2000M1 to 2016M9, we construct a financial vulnerability indicator...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Sciedu Press
2019
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| Subjects: | |
| Online Access: | http://ir.unimas.my/id/eprint/31524/1/Predicting%20financial%20vulnerability%20in%20Malaysia%20-%20Copy.pdf http://ir.unimas.my/id/eprint/31524/ http://www.sciedu.ca/journal/index.php/rwe/article/view/15739 |
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| Institution: | Universiti Malaysia Sarawak |
| Language: | English |
| Summary: | This paper aims to investigate Malaysia’s vulnerability to a financial crisis. The methodology employed is an
extension of the signals approach based on the original work of Kaminsky and Reinhart (1999). By studying the
period from 2000M1 to 2016M9, we construct a financial vulnerability indicator (FVI) to measure the development
of vulnerabilities in the Malaysian financial system. Our empirical findings unveil that the causes of crises are
multidimensional. Notably, economic slowdown, decline in stock price and weak exports contain good predictive
power in assessing financial vulnerability to a crisis. This study highlights the significance of internal and external macroeconomic conditions in determining a country’s vulnerability. |
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